It's Too Early To Give Up On Renewables In The US

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Over the last couple of years, multiple industries have made
big steps towards a more environmentally friendly future and sustainability.
Production lines are becoming cleaner and more companies are willing to
substitute traditional sources of energy for renewable solutions. These
initiatives are paramount as our planet is heating up at a dangerous rate, and
if companies go back to burning coal and increasing the use of oil, drastic
consequences won't be long to come.

During his election campaign, now president-elect Donald
Trump made it clear that he wants to bring the fossil fuel industry back to
health, by 'unleashing an energy revolution that will bring vast new wealth to
our country,' which includes 'unleash[ing] America's $50 trillion in untapped
shale, oil, natural gas, and coal reserves.' Additionally, Mr. Trump addressed
the intention to withdraw the US from the historic Paris Agreement as well as
end Barak Obama's clean energy plan. If promises are kept, the progress that
businesses and the environmental advocates achieved in the last decade will
collapse.

Market reaction on the morning of election results said it
all as renewable energy stocks, including First Solar, Solar City, and SunPower
were down a respective 6%, 17%, and 6%. Meanwhile, the stocks of the world's
top coal trader Glencore Plc's and the mining equipment giant Caterpillar rose
sharply by 5% and 7% (Nov 9).

Donald Trump's vision for the future of the American
business is based on a strong belief that businesses are overregulated thanks
to initiatives led by environmental and governmental advocates which stopped
organizations from maximizing profits. However, president Trump should
acknowledge that renewable initiatives act on behalf of those for profit
generation too. In his statement, Tom Kimbis, interim president of the Solar
Energy Industries Association (SEIA) said that the solar industry, which is
'creating thousands of jobs and billions of dollars in investments across
American communities' will continue to thrive.

Tesla and SolarCity are among those who are likely to suffer
if energy reforms take place. Prior to elections, the merger of these two
companies has already been raising questions among the shareholders, following
Tesla's plan to financially help the struggling SolarCity. The plan includes
combining agendas on sustainability - production of more solar panels, electric
cars, the building of more production facilities, and collaboration with other
companies to maintain innovation. However, Trump's promise to cut environmental
and solar subsidies, which have boosted SolarCity in recent years may force to
put this plan on hold.

However, it may be too soon to give up on renewables, and
here is why.

Firstly, undermining the clean power plan doesn't resonate
with the goal of 'making America great again'. The coal industry has not been
stagnating only due to overregulation and the environmental advocacy. The
natural gas industry has been taking over the coal industry since 2009 when the
amount fuel costs to generate power from gas collapsed, making it a cheaper
alternative to coal, so the latter simply struggles to compete.

According to Bloomberg, even if the Clean Power Plan is
abandoned, renewable energy capacity will continue to grow more than 4% a year
until 2040 and will shape 23% share of generation. Additionally, last year, US
lawmakers renewed tax credits for wind and solar companies for another 5 years.
The move was of paramount importance for renewables as it boosted the
installation of the solar and wind power units following their cost reduction.
Also, by the time when the new tax credit expires, these will create the
cheapest forms of new electricity across the country, and consequently, further
attract investments and encourage production of sustainable products. The measure
and the forecast gained bi-partisan support which means it would be hard for
Trump to repeal it if he would ever want to.

It's too early to make any conclusions on Donald Trump's
presidency, as it has only just begun. Promises made during the election
campaign may never be kept, or there may simply be a change in direction of his
overall strategy. If the aim is to accelerate the country's production of goods
by making it easier for businesses to operate, then Mr. Trump should
acknowledge that it would be extremely hard to ignore or abandon the
initiatives which have massively changed the way businesses operate today.